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VLCC Utilization Up in November

Dec. 13, 2018

In November, VLCC utilization increased to the highest level observed since the beginning of the year at 60.55%, nearly as high as the level observed in November 2017 (60.58%).  Through the first 11 months of the year, utilization has averaged 59.99%, compared to 61.95% in the same months of 2017 (Figure).  Although both ton-day demand and ton-day supply decreased month-on-month, the pace of declines in the latter was greater than the former, placing upward support for utilization.  Ton-day demand decreased by 1.0% month-on-month in November, a slight acceleration from the prior rate, while ton-day supply ...

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More US Crude to Come

Oct. 17, 2018

The latest US Energy Information Administration (EIA) official monthly shows the continued strength in US crude production with July up to 10.96 million b/d, a gain of roughly 270,000 b/d month-on-month.  This also marked one of the higher months for crude exports with 2.1 million b/d observed in July, compared to 2.2 million b/d in June.  Since this period, volumes have declined considerably amid a narrowing of the Brent-WTI crude differential, which averaged just US $3.27/bbl over July compared to US $6.85/bbl in the prior month.  The lower ...

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The Return of Brazilian Demand

Oct. 10, 2018

The Brazilian economy is on track to expand by 1.8% this year, a downward revision from the International Monetary Fund’s (IMF) initial expectation of 2.3% in January.  This downward revision is due to lower than expected consumption, exacerbated by fuel strikes observed across the country, placing a halt on the transportation of goods.  As a result, refined product demand found pressure in May, particularly for gasoline and diesel with the former finding additional weakness in a preference for ethanol consumption due to higher fuel pricing.  We are beginning to see demand pick up yet again; however, a ...

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The Middle East Cleans Up

Sept. 20, 2018

The Middle East stands as the largest crude export region in the world with about 20 million b/d of outflows annually; however, what is perhaps less realized is its growth potential as a clean product export region.  We are beginning to see a fundamental change in the Middle East petroleum industry, with initiatives from government entities to diversify away from reliance on upstream revenues and towards a wider scope of product exports.  As a result, the Middle East has expanded refinery capacity to reach 9.4 million b/d as of the end of 2017 from just 8.4 ...

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The Rise and Fall of West African Crude

Aug. 9, 2018

West African crude supply has faced recent pressure due to aging oil fields in both Nigeria and Angola as well as pipeline constraints in the former; however, pressure is likely to be relieved in the second half of 2018 and moving into 2019.  According to JBC Energy, Total’s Kaombo project came online with an initial production capacity of 115,000 b/d, while a second FPSO is projected for 2019, bringing levels to 230,000 b/d.  Unfortunately, this will only provide a short-term boost to Angolan production through 2019 as chronic underinvestment in prior years will come to ...

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